Traditional, online retailers fight for holiday dollars

Shoppers in search of good deals are in for a few pleasant and unpleasant surprises this holiday season. (Source: MGN)

(RNN) – Stores are hoping the spending trend this year will continue on its upward course, including the world's largest retailer, which is banking on shoppers looking for deals early.

The National Retail Federation, the trade association that represents stores worldwide, expects holiday shoppers will spend an average of $749.51 on things like gifts, decor and greeting cards. That's an increase of nearly a dollar from the previous year.

It may not seem like a lot, but overall holiday spending is expected to top $586.1 billion, a 4.1 percent increase.

That's a far-reaching prediction given the uncertainty in the economy, but it came several weeks before the presidential election.

President Barack Obama's successful bid for a second year in office caused slight panic in the financial world. The Dow Jones plunged less than 24 hours after Election Day amid fears that spending under Obama's administration combined with a split Congress will prevent lawmakers from extending tax cuts and funding to federal financial support programs beyond the Dec. 31 deadline.

However, the NRF had reported spending in September was up from August and from the same month a year ago.

"This is the most optimistic forecast NRF has released since the recession," said NRF President and CEO Matthew Shay. "In spite of the uncertainties that exist in our economy and among consumers, we believe we'll see solid holiday sales growth this year."

Shay acknowledged that reaction to the election, confusion about the "fiscal cliff" and concerns about future economic growth could combine to affect spending. But overall, he was confident that promotions from retailers would lure in customers.

The number of shoppers that arrive at stores before midnight has risen from 3 percent in 2009 to 24 percent last year, according to the NRF.

Walmart is one such company that is laying the bait. It announced recently that it would open at 8 p.m. Thanksgiving, the earliest ever, instead of the morning of Black Friday.

Walmart joined several retail stores last year in opening their doors at midnight, much earlier than traditional Black Friday openings. The move struck gold with shoppers but prompted protests from employees in several cities.

The retail giant is so confident its 8 p.m. Thanksgiving opening will go over with consumers that it made heavy investments in merchandise and guaranteed shoppers waiting in line access to a trio of electronic purchases – the iPad 2, 32-inch Emerson LCD TV and LG Blu-ray player.

"We bought deep, very deep, and we bought deep on items that matter to our customers," Walmart U.S. Chief Merchandising and Marketing Officer Duncan Mac Naughton told Reuters. "We got customer feedback that says ‘I like to shop earlier so I can go to bed earlier.'"

If stores run out of any of the three electronic items promised to waiting customers, Walmart will issue them a redeemable card for all the items. But buyers have to pay for them by midnight and register them online, and they will be shipped to the store.

Other stores including Sears, Kmart and Toys R Us will also open on Thanksgiving Day.

Dark side to Black Friday

Standing in long lines and fighting crowds to grab that coveted flat-screen TV or video game console might not provide the payoff you think.

Decide Inc., an online consumer price research company, released data that shows certain electronics are not sold at their lowest prices the day after Thanksgiving. The Wall Street Journal reported the data, which Decide Inc. acquired by comparing more than 50 stores and online retailers for a period of at least two years.

The company found that several items – especially watches and jewelry – get more expensive as the holiday season progresses. In fact, some popular items are at their lowest several months before or after the holidays.

That should be music to the ears of most shoppers because only 16 percent plan to begin shopping in the first two weeks of December, according to an NRF poll. The same poll showed the majority of shoppers planned to begin their holiday shopping before Halloween.

Even if items are at their lowest on Black Friday, the high demand limits buyers' chances of getting what they want. It's also important to keep in mind that stores restock for the Christmas season and are willing to lower prices to dump inventory.

Some stores will slash prices on unsold items like clothes and shoes the day after Black Friday because, unlike a TV or a camera, one item cannot conform to every person and stores don't want them sitting on shelves.

The competition that internet shopping poses makes pricing for traditional stores both a headache and a gamble. Besides avoiding traffic and crowds, online shoppers can compare price tags more quickly and stand a higher chance of snagging a good deal.

Target and Best Buy offer online price matching during certain times of the season. Walmart only does price matching in its physical stores.

Online shopping is again expected to follow the rising trend in recent years and provide a boon for the holiday sales season.

Shop.org coined the term "Cyber Monday" in 2005. According to a joint study that year with BizRate Research, more than three quarters of online retailers reported significant spikes in their sales on the Monday following Thanksgiving.

A 2010 comScore report said that Cyber Monday was the biggest retail shopping day that year, yielding more than $1 billion in sales. Sales reached an all-time high of 1.25 billion last year.

Shop.org, a branch of the NRF, runs Cybermonday.com which directs shoppers to hundreds of retailers offering online discounts. The organization predicted that Cyber Monday sales would rise another 12 percent this season.

Online retailers are also designing promotions to attract shoppers and keep them on their sites longer which, of course, means more money.

"In addition to enhancing the site experience, retailers have spent the year investing in optimizing their mobile and social platforms, just what holiday shoppers are looking for," said Shay.

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